Bitcoin and the US Tariffs: Will BTC Be a Safe Haven Asset?

If you hold a certain amount of Bitcoin or whether you're planning to buy some soon, you must be wondering what impact the US tariffs have on the coveted crypto's price.

If you're a fan of cryptocurrencies, you're likely interested in the impact of US tariffs on the price of Bitcoin. As the value of BTC continues to fluctuate, any government policies that could influence this movement are likely to be of interest to traders and investors.

Earlier this year, President Donald Trump announced a surprising return to the White House for a second term. This return has been followed by a series of rapid-fire and draconian measures, from eerie promises of mass deportations to a slew of controversial decisions. Among these is the head of the Department of Government Efficiency (DOGE), Elon Musk, who has been keeping traders and investors on a string.

Pledge to impose 25% tariffs on Canada, Mexico, and 20% on Chinawithin 100 days

Among his campaign promises ahead of the 2024 presidential elections, Trump vowed to impose 25% tariffs on imports from Canada and Mexico, and 20% on those from China in his first 100 days in office. These pledges made Trump one of the most polarising political figures of the 21st century.

But “tariffs” is not the only “most beautiful word in the English dictionary,” according to the US President. The word “cryptocurrency” is also held dear by the president, who promised to enact a series of deregulation measures aimed at bolstering Bitcoin and altcoins’ value.

To this end, he signed an executive order that serves as the foundation for a so-called “Strategic Bitcoin Reserve” and a “Digital Asset Stockpile,” which will include Bitcoin alongside other cryptocurrencies. The funds will be held with digital currencies forfeited to the federal government as part of legal proceedings. According to David Sacks, the White House AI and crypto “czar,” this reserve will be “a digital Fort Knox for the cryptocurrency,” which he likened to the Kentucky military base that stores a significant amount of US gold assets.

This statement comes amid a wave of polarising reactions from crypto enthusiasts, some of whom are critical of the government for not taking a bolder stance in accumulating crypto assets. Others, however, have expressed skepticism towards the transparency of the process.

Sacks has reportedly ordered a complete account of the government’s crypto asset reserves, which he estimated at 200,000 Bitcoin alone. But is that enough to turn Bitcoin into a hedge? The answer to this question is more complex.

The launch of Trump's name meme-coins $TRUMP and $MELANIA just before inauguration day sparked amusement in the industry. However, Danny Scott, CEO of CoinCorner, expressed his thoughts, stating, "Trump's comments about not knowing much about the coin back up my opinion that he is making a mockery of the industry. It's a stunt."

This hazy background contrasts somewhat with the potential impact of the US tariffs on cryptocurrencies, specifically Bitcoin. Assuming that Donald Trump completes his tariffs’ mandate, immigration policies and tax cuts, inflation could rise rapidly.

But this type of inflation will not be a positive sign at all. For example, the cost of German motor vehicles in the US would surge, rushing Americans to open their wallets before the tariffs are enforced. This upsurge in consumer spending could temporarily drive retail sales higher, creating an artificial sense of economic growth.

The early signs of this were seen in December 2024, when the consumer price index (CPI) rose at an annual rate of 2.9%, backed by a lower core inflation. Cryptocurrencies, which unlike safe-haven gold, have a growth component that makes them inherently more sensitive to economic shifts such as inflation spikes and tariffs. And Bitcoin is no exception.

Driven up by 2% as the US CPI data sent mixed inflation signals across markets, Bitcoin surged $1,500 to $98,000 in 24 hours in December 2024. Because of its nature, many investors and traders consider Bitcoin a commodity. From this perspective, it’s worth exploring the effect of the recently vehiculated US tariffs on Bitcoin and the broader crypto market.

Near-term, tariffs may hurt Bitcoin’s and the crypto market’s performance, precisely because of its inherent growth-driven characteristic. This is evident in its recent price action. As fear gripped the financial markets, Bitcoin hit a 4-month low amid a massive crypto market sell-off.

The crypto market reached a staggering $1 billion in liquidations in the space of 24 hours (between March 10 and March 11), making many traders bail out of their positions. Bitcoin and Ethereum, the largest cryptocurrencies by market capitalisation, were the biggest losers of this downturn.

The main reason behind this mind-blowing price drop is the large movement of cryptocurrency by key players. Mt. Gox, the not-long-ago dominant crypto exchange, transferred tens of thousands of Bitcoin as it settles debts, triggering sell